AM Best affirms the financial strength rating of ‘B+’ (Good) and the long-term issuer credit rating of ‘bbb-’ (Good) of Orion Reinsurance, class 3 captive insurer based in Bermuda.
The outlook of these ratings is ‘stable’.
The ratings reflect Orion Re’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The ratings also reflect the company’s very strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), and the expertise of its management team.
Partially offsetting these positive rating factors is the size of the company, which limits business diversification given the inherent concentration risk, and the sensitivity of the BCAR to changes in its balance sheet structure and to the composition of the business portfolio.
Orion Re’s main line of business is difference in conditions insurance, but the company also retains specific life and non-life insurance business. The rating agency assesses that Orion Re achieved premium sufficiency in 2023 and has consistently produced profitable bottom-line results.
Results are expected to improve as the business expansion plan takes place, supported by income from the rent-a-captive business, which has presented a consistent flow over the past years.
Furthermore, AM Best predicts that positive rating actions could take place with consistent strengthening of the company's balance sheet, supported by a successful development of the business strategy.
On the other hand, negative rating actions could occur if premium growth, changes in the asset structure and/or underwriting risk profile or deteriorating operating results reduce risk-adjusted capitalisation to a level that no longer supports the ratings.
